Nef Cortez asked:


So you find you have managed to scrimp and save some money for a down

payment on a house, have paid off your vehicle, and you also have found you

have enough surplus monthly income for a new car payment. If you are in this

position, and your vehicle can still manage to incur a few thousand more

miles consider holding off on the purchase of a new car. You may ask, ¡°Why

is this advisable?¡± The reason is that most first-time homebuyers, and some

veterans, do not know that your new car payment will directly affect your debt-

to-income ratio.

Suppose for illustration sake, you had purchased the new car and you contact

a loan officer to get pre-qualified for a mortgage loan. You state your desired

price and how much you have managed to scrimp and save for the down

payment. You provide your income and may even supply pay stubs and W2

forms. The loan officer methodically crunches the numbers (by telephone, in

person, or even over the internet). And the loan officer promptly lets you know

that you would have qualified for a higher home sales price if you didn’t have

¡°that expensive car payment’!

You see, when determining your ability to qualify for a mortgage, in addition to

your three-digit credit score a lender looks at what is called your “debt-to-

income” ratio.

A debt-to-income ratio is the percentage of your gross monthly income (before

taxes) that you spend on debt. This will include your monthly housing costs,

including principal, interest, taxes, insurance, and homeowner’s association

fees, if any. It will also include your monthly consumer debt, including credit

cards, student loans, installment debt, and of course, car payments. Your debt-

to-income ratio is the amount of debt you have in the form of mortgages, car

loans, student loans and credit card debt, as compared to your overall income.

You might ask, ¡°Why is this number so important? I make a good income and

I’m never late on my monthly payments, well only occasionally.¡± What it

comes down to is the amount of debt you have to pay on a monthly basis

relative to your monthly income. You may bring in a hefty paycheck but have

equally hefty debt payments which could be a problem. Or you may make a

modest income but have low monthly debt payments. Your ability to qualify

for a mortgage loan is unique to your particular financial situation. That’s why

lenders look at this number just as closely as your FICO score.

To calculate your debt-to-income ratio, add up all of your monthly debt

obligations-often called recurring debt-including your mortgage (principal,

interest, taxes, and insurance) and home equity loan payments, car loans,

student loans, your minimum monthly payments on any credit card debt, and

any other recurring loan payments you might have. Do not include expenses

such as groceries, utilities and gas. Take this total and divide it by your gross

income from all sources. If you want to try your hand at a debt-to-income ratio

calculator, go to www.bankrate.com , which has a

great online tool to help you figure out your debt-to-income ratio.

Let’s say you and your spouse together earn $60,000 per year or $5,000 per

month. Your total mortgage payment is $1,100 your car loan totals $400,

your minimum credit card payments are $150 and your student loans add up

to $100. That equals a recurring debt of $1,750 a month. Divide the $1,750 by

$5,000 and you’ll find your DTI is 35 percent.

In general, you’ll want to keep that number below 36 percent-a threshold that

loan officers and credit card issuers often use as a factor when they determine

how much they’re willing to lend you. If you go higher than the above

mentioned number, you may be able to qualify for a loan but usually at higher

interest rates and therefore higher monthly payments. The higher your DTI

number, the riskier it is for lenders to offer you loans-and the more they’ll make

you pay for them.

Looking back at our example, suppose you earn $5000 a month and you have

a car payment of $400. Using an interest rate of 8.0%, you would qualify for a

mortgage loan that was approximately $55,000 less than if you did not have

that new car payment. Are you seeing the importance of holding off on that

new car?

So, if you have not already bought a new car, and your old one can still take a

few thousand more miles, try to qualify for the home first which as an

appreciating asset will bring you great tax savings, as well as a place to live in.

You can forgo that ¡°new car smell¡± for another time!

For more information on mortgage loans visit http://www.nefcortez.com



POLLY

Davy Jones Andrwson asked:


 

New car finance and used car finance help people to get the car they need if they do not have the money themselves. Some dealerships actually finance, but most often, the dealer has a preferred lender they work with to approve funding. The borrower’s credit will definitely be an issue during the approval process. If the borrower does not have a long enough credit history or has negative items on their credit report, a co-borrower might be required in order to obtain this guaranteed car finance.

Any type of car can be financed with Guaranteed Car Finance loan, whether the driver wants to buy a car, a car, or a sports car what a student or other fellow wants to buy. Be smart and make sure the car is a safe choice and also that it will be dependable. A new car loans enables a driver to purchase a vehicle, which otherwise, they would not be able to do. An automobile is a large expense, regardless of the make or model. Even the most inexpensive vehicles cost at least ten thousand dollars.

Paying on this Automotive Loans is as important as paying on any other debts. When possible, borrowers should pay more than the monthly payment amount in order to pay off this easy car loan more quickly. This will reduce the amount of interest paid over the life of the loan. When searching for a new automobile, choose a reputable car dealer who offers a good warranty, as well as a good price. Buying a vehicle is a great investment, but it is also a large financial responsibility. Take care of the vehicle with proper maintenance and repairs when needed.

Many people will have the opportunity to buy a new vehicle so that they can get around because of car loan. A dependable automobile is extremely important for those who work outside the home and is key to the success of their career. Auto lenders realize this and are able to offer a wide variety of lending options to suit the individual needs of their borrowers. Choose a good loan with a reliable lender. Many drivers take the first lender they are approved with, often through the dealer. This is unwise. It is better to wait for a Low Interest Car Loan. Then borrowers won’t have to refinance down the road.



GENEVA